Indonesia Automotive

Industry

Automotive & Machinery Working Group on EIBD Conference

Tuesday, 30 November 2010

Ir. Agus Tjahajana , SE.MSc

Director General International Industrial Cooperation
Ministry of Industry of The Republic of Indonesia

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 INDONESIAN AUTOMOTIVE IN BRIEF
• National Automotive industry has developed for more than 30 years.
• Tens of assemblers of various types of Cars and motorcycles have now
existed in the country.
• Also, there are hundreds of component industries producing various
types of components to support assemblers of motor vehicle, as vendor
items and for export market.
• Market for MPV (Multi Purpose Vehicle) is very strong, making
Indonesia is considered as one of production bases of MPV for domestic
and export markets.
• Automotive industry absorbs large number of labours, using simple to
high technologies, and become pull sector for SMIs development
• With those progress Indonesia has a strong basis in automotive
industries

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 Market and Production



Supply
Supplyand
anddemand
demand
• Regional and global automotive market demand (Source : Jama 2010)
– Dominated by world players that control market ,supply of material and
component, as well as technology.
– From 2006, world automotive market demand tends to decrease; car market in
2008 was only 63,1 million units (growth trends = -1,12 % / year)
– But Asia and ASEAN demands for car were increased, where in 2008 Asian was
19,4 million units (growth trends = 5,62 % / year) and ASEAN was 1,77 million
units (growth trends = 8,90 % / year)
– Growth from 2006 up to 2008 : Indonesia = 37,92 % ; Thailand = -5,12 % ;
Malaysia = 5,68 %.

• During the last 5 years, Indonesia’s market and production for cars and
motorcycle has grown around 7-8% each year.
• For 2010, market demand for cars in Indonesia is predicted to be around 750.000
units, while Motorcycle is predicted 7,4 million units

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 Market and Production (cont’d)

• Production of European Premium Sedans was 2.824 in 2009 and predicted will be
around 5000 this year or grew 6,78% / year in the last 5 years
• Sales of European Premium Sedans in 2010 is predicted to be around 6.000 unit,
or grow around 4,84% during the last 5 years
• Export of CBU Unit and CKD Sets as well as Component Pieces this year are
slowing down compared in 2008 though the growth during the last 5 years are still
positive especially in CBU unit (29,52%)
• Imports of CBU Unit in 2010 is also slowing down compared to 2008 though the
growth during the last 5 years are still positive around 15,45%

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 AVERAGE AUTOMOTIVE IMPORT DUTIES (%)

YEAR
2010 2012 2014 2016
Tariff
MFN 16,57 16,57 16,57 16,57
CEPT-AFTA 0,00 0,00 0,00 0,00
ACFTA 16,14 15,70 15,70 15,51
AKFTA 8,40 7,55 7,55 7,55
IJEPA 6,94 2,77 2,77 2,77
Source : PP-KIUI MOI

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 Indonesia Automotive Import Duty & Luxury Tax

Import Duty Luxury

Category Remarks CBU CKD IKD Tax
2007 2008 2009 2010 2007 2008 2008 2010 2009
cc<1.5 (G/D) 55 50 50 40 25 15 15 7.5 30
Sedan Type 1.5<cc<3.0 (G) /2.5(D) 55 50 50 40 30 15 - - 40
cc > 3.0 (G) /2.5 (D) 55 50 50 40 40 15 - - 75
cc<1.5 (G/D) 45 45 45 40 20 15 15 7.5 10
1.5<cc< 2.5 (G/D) 45 45 45 40 20 15 15 7.5 20
4X2 Type
2.5 <cc < 3.0 (G/D) 45 45 45 40 20 15 15 7.5 40
cc > 3.0 (G) /2.5 (D) 45 45 45 40 20 15 15 7.5 75
cc<1.5 (G/D) 45 45 45 40 20 15 - 7.5 30
4X4 Type 1.5<cc<3.0 (G) /2.5(D) 45 45 45 40 20 15 - - 40
cc > 3.0 (G) /2.5 (D) 45 45 45 40 20 15 - - 75
GVW5-24 ton(G/D) 40 40 40 40 20 15 5 0 10
Bus
GVW> 24 ton (G/D) 10 10 10 10 5 5 5 0 10
GVW< 5 ton (G/D) 45 45 45 40 20 15 15 7.5 0
Pick Up/Truck GVW5-24 ton(G/D) 40 40 40 40 20 15 5 0 0
GVW> 24 ton (G/D) 10 10 10 10 5 5 5 0 0
Double Cabin GVW< 5 ton (G/D)
45 45 45 40 25 15 15 7.5 20
4X2 /4X4 For All cc

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Production
Production
Production of Cars : Total Work Force : + 380.000
• 20 Assembling Companies (Work Force : 19.000 people) Avg : 950 People/Company
• 150 Lvl 1 Component Industries Companies (Work Force : 42.000 people) Avg : 280
People/Company
• 350 Companies Lvl 2 Component Industries (Work Force : 11.000 people) Avg : 32
People/Company
• + 11.000 Authorized Outlet (Work Force : + 77.000 people) Avg : 7 People/Outlet
• + 33.000 Non Authorized Outlet (Work Force : + 231.500 people) Avg: 8
People/Outlet

Production of Motor Cycles : Total Work Force : 1.653.600

• 40 Assembling Companies (Work Force : 27.600 people) Avg : 690 People/Company

• 195 Lvl 1 Component Industries Companies (Work Force : 39.375 people) Avg : 202
People/company
• 600 Companies Lvl 2 Component Industries (Work Force : 11.625 people) Avg : 20
People/Company
• + 18.000 Authorized Outlet (Work Force : + 262.500 people) Avg : 15 People/Outlet
• + 90.000 Non Authorized Outlet (Work Force : + 1.312.500 people) Avg : 15
People/Outlet 7
 State of Play of Automotive Business
Automotive tends to become Seller Market,
(to meet demand of Developed Countries buyers)

Design & features are based to the demand of developed countries Buyers

This spoiled the emerging economies buyers

With their purchasing power, emerging countries mostly need car only for
transportation

Low cost car will become a strategic target to mass develop

Low Cost Car (safely and Environmentally Friendly)

Niche Market
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  Demand Forecast

DESCRIPTION UP TO 2010 UP TO 2015 UP TO 2020 UP TO 2025

car :

 Production 750.000 unit 1.207.883 unit 1.945.307 unit 3.132.936 unit

 Sale 750.390 unit 1.208.511 unit 1.946.318 unit 3.134.565 unit
 Export 111.741 unit 179.960 unit 289.827 unit 466.770 unit
 Production 81.000 130.451 210.093 338.357
(Billion Rupiah)

Motorcycle:

 Production 7.579.000 unit 8.164.735 unit 8.795.739 unit 8.795.739 unit

 Sale 7.470.355 unit 8.047.694 unit 8.669.652 unit 8.669.652 unit
 Export 26.100 unit 28.117 unit 30.290 unit 30.290 unit
 Production 98.527 106142 114.345 114.345
(Billion Rupiah)

Notes: car, average annual growth rate after 2010 is assumed to be 10%
2-WHEEL, average annual growth rate after 2010 up to 2020 is assumed to be 1.5 %, and there will be no increase from 2020 up
to 2025. 9
 Road Map
DESCRIPTION UP TO 2010 UP TO 2010 UP TO 2020 UPTO 2025
 Type of  MPV, Light  MPV, Commercial Truck  MPV, SUV, small  MPV, SUV, small
motor Commercial Truck. up to 24 ton, SUV and economical sedan, economical
vehicle small economical sedan Commercial truck > 24 sedan,
ton, medium size Commercial truck
sedan, Hybrid car > 24 ton, medium
size sedan, Hybrid
car, Luxury car.
 Production  Production base of  Production base of MPV,  Production base of  Production base
base MPV, Light Commercial Truck up to MPV, SUV, small of MPV, SUV,
Commercial Truck. 24 ton, SUV small economical sedan, small economical
economical sedan Commercial truck > 24 sedan,
ton, medium size Commercial truck
sedan, Hybrid car > 24 ton, medium
size sedan, Hybrid
car, Luxury car.
 Technology  Capable of designing up  Capable of designing up to  Capable of designing up  Capable of
acquired to 80% of motor cycle 80% of car motor vehicle for to 80% of car motor designing up to
 Manufacture of engine, MPV and Light commercial vehicle for SUV and small 80% of car motor
transmission, production truck size sedan, Light vehicle for medium
base for MPV and Light  Manufacture of engine, commercial truck size sedan .
Commercial Truck. transmission for motor  Manufacture of engine  Manufacture of
vehice production base, (hybrid engine). motor vehicle
Commercial Truck up to 24  Integration of ECU component for
ton, SUV and small (engine control unit) Luxury Car quality
economical sedan system level.

 Capability of  Capable of supplying  Capable of supplying  Capable of supplying  Capable of

component component for MPV and component for Commercial component for supplying
industry Light Commercial Truck. Truck up to 24 ton, SUV and Commercial Truck up to > component for
small size sedan 24 ton, medium size Luxury car quality
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sedan, Hybrid car. level
 Road Map

2025 -MPV, SUV, Small economical sedan, Commercial truck

> 24 ton, Medium size sedan, Hybrid car and Luxury car.
- 80% design of 4W motor vehicle for medium size sedan.
- Manufacture of luxury car quality component.
- Supplier of luxury car quality component.

- MPV, SUV, Small economical sedan,

Commercial truck > 24 ton,
Medium size sedan, Hybrid car.
2020 - 80% design of 4W motor vehicle for sedan and SUV.
- Hybrid engine, ECU integration system.
- Commercial truck component > 24 ton, Medium size sedan, Hybrid car.

- MPV, Commercial Truck until 24

ton,
SUV design
-80% and small economical
of 4W sedan.
motor vehicle for MPV and
Light commercial truck.

2015 - Manufacture of engine, transmission for Commercial Truck up to 24 ton,

SUV and small economical sedan .
- Supplier of component for Commercial Truck up to 24 ton, SUV and small size sedan.

- MPV, Light Commercial Truck.

- 80% design of motor cycle.

2010 - Manufacture of engine, transmission for MPV and Light Commercial Truck.
- Supplier of component for MPV and Light Commercial Truck. 11
POLICY

• Development of domestic market through tariff

harmonization and taxation.

• Increasing domestic component industry capability.

• Providing incentive for development of R&D.

• Providing fiscal incentive to attract investment in high

technology component industry.

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STRATEGY
• Sector :
• To strengthen production basis commercial vehicle, small
passenger car, and motor cycle.
• To increase product and manufacturing technology capability
motor vehicle component industries.
• To strengthen industrial structure in all value chain through
development of automotive clusters.
• To develop interlinkage of supply chain through clusters.
• Technology :
• To develop design engineering and development of automotive
component, full manufacturing of motor cycle.

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 PROGRAM / ACTION PLAN

Short Term Medium Term

(up to 2014) (up to 2020)
•Increase volume by introducing • Increase export mastery for D&E
low cost car CBU
•Strengthen and developing • Technology mastery for
clusters component and product
• Increase component industry development.
investment in the second and • Increase productivity and quality
third tiers of component industry.
•Increase component industry
capability in manufacturing
technology and product
development.
•Increase productivity and
quality of component industry.
•Increase capability and inter-
linkage of SMI and assembler.

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 Eco-CAR Program

• Vehicle with very efficient fuel consumption

• Comply to minimum of standard Euro III
• Very affordable price for majority of people
• Locally manufactured and use very high
local content

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